"The American people brought our economy back from the brink
of a complete economic meltdown caused by the poor decisions of big Wall Street
banks," said Shaheen. "We need to protect taxpayers by making sure these
Wall Street firms can't engage in the same risky behavior."

"There is a place for high-risk speculation on the prices of
stocks or securities, but these bets can no longer be allowed to threaten our
entire financial system," said Merkley. "Taxpayers should never again be
told that they have to save bankers from their bad bets."

"With this bill, we attempt to rein in risky proprietary
trading by firms whose failures wreak havoc on our financial markets and our
taxpayers," said Levin. "Risky trading by a handful of major firms
contributed to the collapse of the some of the largest financial firms in the
world, hundreds of billions of dollars in losses to taxpayers, and the
devastation of the entire world economy. This legislation is aimed at
preventing high-risk trading strategies adopted by a few firms from leading to
another crisis."

"Congress has to draw hard lines to deal with 'too big
to fail' and prevent another financial crisis. We must restore the wall between
federally insured banks and risky proprietary trading," said Kaufman.

"For years, investment banks packaged and sold toxic financial
products and then used their own money to bet against these products. Banks got
rich, investors got hosed, and taxpayers got stuck with the bill. It's time for
Congress to rein in Wall Street greed and end these conflicts of interest,"
said Brown.

The Protect our Recovery through Oversight of Proprietary
Trading Act (or PROP Trading Act) would restrict these trades at banks and
other large, important financial institutions. By keeping our banks and
other large, complex financial institutions away from these risky activities,
the bill will help protect the taxpayer from bailouts and the damage to the
economy that comes from the failure of critical financial institutions.
At the same time, the bill leaves plenty of space for smaller firms to do
speculative trading, but outside of taxpayer-supported commercial banks.
Specifically, the bill:

Bars banks, bank holding companies, and their
affiliates and subsidiaries from engaging in high risk speculation involving
any stock, bond, option, commodity, derivative, or other security or financial
instrument. Also bars those entities from investing in or sponsoring a
hedge fund or private equity fund.

Requires large, important nonbank financial
institutions to set aside additional capital to discourage them from engaging
in high-risk speculation and investing or sponsoring hedge funds or private
equity funds. The bill also puts strict limits on the amount of such
speculation.

Prohibits securities brokers from betting
against the packages of loans (asset-backed securities) they are promoting to
their clients.

In addition, the PROP Trading Act would address fundamental
conflicts of interest associated with the sale of packages of securities made
up of loans. Some financial firms put together and sold securities to
their clients and then bet heavily against them. As some have noted, this
is like building a car with no brakes, and then taking out life insurance on
the purchasers. The PROP Trading Act would establish strong conflicts of
interest protections to protect clients from these unfair and deceptive practices.

This legislation has been endorsed by business and
investment leaders John Reed, the former Chair and CEO of Citibank, Bill
Hambrecht, Chairman and CEO of WRHambrecht + Co, and Jeremy Grantham, Chairman
of Grantham, Mayo, Van Otterloo & Co; leading academics Joseph Stiglitz,
Robert Reich and Robert Johnson, Director of Economic Policy for the Roosevelt
Institute; and major organizations calling for real Wall Street reform,
including the Independent Community Bankers of America, Americans for Financial
Reform, and the AFL-CIO.